Eco7: Launching A New Motor Oil Case Study Solution: Marketing Mix

Eco7: Launching a New Motor Oil Case Study Solution
INTRODUCTION
A demand for eco-friendly and fuel-efficient vehicles increased in the

market, as shown by surveys in 2012, and customers were ready to pay
a premium price for eco-friendly products in the market. Eco7’s
development was an outcome of this increase in demand. It was a new
kind of motor oil developed by Avellin, which was made fro recycled
products.
The distribution networks available to Avellin were:
1. Avellin Auto, a fast lube chain accounting for 7% of overall sales

2. 6000 independent fast lubes and 6500 oil change plus
accounting for 66% of sales.
3. National retailers are attracting the DIY segment accounting for
9% of sales.
The Passenger Car Motor Oil (PCMO) market was worth $10.5bn and
had reached the maturity phase in its life cycle. Therefore, the need for
innovation became a necessity to penetrate this market. This fact is
why products like Servoline started to show promise in the market,
which was a new kind.
MARKETING MIX
The marketing mix refers to all the strategies that a company uses to
promote its brand or product in the market. The 4P’s that make up a
typical marketing mix are Product, Price, Place, and Promotion.
PRODUCT:
The key features of the product that distinguish it from the other
products can be given as:
 It was a complete, environmentally, and friendly motor oil.

 It was manufactured mostly from recycled materials.
 It used 45% less energy for application.
 It is made of 65% recycled motor oil.
 It is packaged as a part of PCMO services.
 It gave better driving performance and required changes only
after 7,500 miles.
 It could withstand higher temperatures compared to other
products.
 It could be recycled multiple times for various other uses.
PRICE:
There were two prices suggested by the wholesale retailers and

distributors.
Pricing at $5.25
 The margin would be too tight, and it would become difficult to

squeeze the margins.
 It would lead to the devaluing of the innovation.
 It would also lead to undermining the efforts to market Eco7 as
it was a premium product.
 It would make the product very easy to sell.
 Approximately expected sales were 4.5 per day.
Pricing at $6.75:
 This price is nearly as high as a full synthetic product.

 It is difficult to sell independently.
 It requires an installer to understand the product well enough to
explain it to the customer. Hence, this price would be high to
carry out the whole process.
 The competitor is selling at $7.5; hence this would be close to
that product.
 Approximately expected sales are 3.5 per day.
Hence, any price range in between these two ranges would be ideal for
the product so that at an average sales of 4 units can be done at other
retail stores, and at the AvellinAuto stores, they could expect sales on
six units at an average.
PLACE:
Independent DIFM:
 These included fast lubes, oil change, plus stores and repair
shops.
 To build loyalty, the company promoted the Aventage program
among these channels.
 There were 6000 independent fast lube and 6500 motor oil
change plus stores and repair shops.
 4,400 of these were in the Aventage program.
Car Dealer:
 These sell hybrid and electric cars.

 They provided predetermined maintenance checks.
 One-stop shop for all maintenance activities to be performed.
 The oil change would be performed under the manufacturer’s
recommendation of the vehicles.
AvellinAuto:
 Avellin sold via its own Avellin Auto stores.

 These were located near the distribution center and away from
other independent DIFM.
 Margin in these stores is higher than in other stores.
 These stores generated 7% of the PCMO sales.
Avellin had three different channels of distribution that target various

types of customers, and these channels are through the independent
DIFM and the National Dealers. Aventage program was undertaken as
a loyalty program by the independent DIFM, whereas the large mass
merchandisers accounted for a total of 9% of Avellin sales.
PROMOTION:
According to the new market trend, the customers who valued eco-
friendly motor oil products was very high in number. Avellin came up
with two strategies for their promotion, that is:
Aventage:
This program was launched among the independent DIFM to

strengthen brand awareness and improve the perception. The main
motto behind this was to communicate to the customer. Customers
need to be provided with the best value in terms of quality and value
of money.
Avegreen:
This program was launched among the various car dealers to create a
new market segment. Also, this would support the value given by the
green product. Similarly, there was an emphasis on the green factor
with providing the best value in terms of quality and value of money.
SITUATIONAL ANALYSIS
Company Analysis
Founded as an oil refiner in 1936, Avellin operated in two divisions

since 1995. These were the Industrial Materials [Resins & Adhesive
Technology] and Automotive [Lubricants & Other automotive care
products]. The automotive division accounted for about 40% of the
firm’s profit.
Question :
Is motor oil a high or low involvement purchase? How do you know?
Answer :
The motor oil is a low involvement purchase for the consumers as a survey was
conducted regarding the buying behavior of the customer towards the purchase
of motor oil. It was found in that survey that most of the customers are not even
aware of oil classifications which are conventional, full synthetic and synthetic
blend and most of the customers cannot even recall of which brand oil they had
purchased the last time they had changed their vehicle’s oil. The customers are
only told that the oil needs to be changed after driving 3000 miles or three
months after its last oil change.
The only thing which the customer is mostly conscious about before doing an oil
change is the price. Since the conventional oil is the least costly than the other
two, most of the consumers use the conventional oil for their vehicle. Due to
advanced technology, new eco-friendly oils are being introduced in the
market.Also, it was surveyed that the customers who valued environmental
options are significantly increasing nowadays.

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Eco7: Launching a New Motor Oil Case Study Solution

A demand for eco-friendly and fuel-efficient vehicles increased in the

The distribution networks available to Avellin were:

1. Avellin Auto, a fast lube chain accounting for 7% of overall sales

 It was a complete, environmentally, and friendly motor oil.

There were two prices suggested by the wholesale retailers and

 The margin would be too tight, and it would become difficult to

 This price is nearly as high as a full synthetic product.

 These sell hybrid and electric cars.

 Avellin sold via its own Avellin Auto stores.

Avellin had three different channels of distribution that target various

This program was launched among the independent DIFM to

Founded as an oil refiner in 1936, Avellin operated in two divisions

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